The global smartphone market, which has been in a downturn, is showing signs of revival due to the release of new models from major manufacturers like Huawei and Xiaomi. Research from Zheshang Securities suggests that the market is emerging from an adjustment phase, and Southwest Securities notes a substantial reduction in inventory levels over the past six quarters among major smartphone manufacturers and component companies. These reduced inventories are now approaching a healthy balance, indicating a forthcoming industry recovery.
Chinese Smartphone Industry Recovery
Huatai Securities anticipates a moderate rebound in specific sectors like panels, passive components, storage, certain modules, and mobile chips in the third quarter. This recovery is expected to positively impact companies within the smartphone industry chain during the latter half of the year.
In the third quarter of 2023, the Chinese smartphone market saw a 5% year-on-year decline in shipment volume, according to Canalys. However, this decline is showing signs of easing, indicating a gradual market recovery.
Huawei Mate 60 and Xiaomi 14 Lead the Way
Huawei’s Mate 60 and Xiaomi’s 14 series have played a crucial role in the recent turnaround of the Chinese smartphone market. The Mate 60 series, despite U.S. technology restrictions, has made a significant impact, directly competing with Apple’s iPhone 15. In October, Huawei achieved an impressive 83% increase in sales, while the iPhone 15 only experienced an 11% growth, raising speculation about Huawei’s potential global resurgence.
In contrast, Apple’s waning demand in China has opened the door for local brands like Xiaomi to capitalize on the opportunity. Xiaomi’s market valuation saw a remarkable recovery, increasing by $20 billion after a low in June, fueled by successful smartphone launches, expansion into electric vehicles, and diversification into other business areas. This recovery was reflected in a 60% rise in Xiaomi’s stock, leading the Hang Seng Tech Index.
Xiaomi's Success and Growth Potential
Xiaomi‘s success isn’t just confined to the stock market. The 14 series has been a consumer hit, garnering over a million orders since its announcement in October. Analysts point to Xiaomi’s growth potential not only in the smartphone sector but also in AIoT and their upcoming electric vehicle venture. Counterpoint Research’s data supports this optimism, highlighting Xiaomi as the only top-five smartphone brand to record shipment increases in key markets like China and India in the third quarter of 2023.
Overall, the recovery of the smartphone market appears to be in motion, aided by these new product launches and strategic shifts by key players. However, for a sustained recovery, companies within the industry will need to continue focusing on innovation, enhancing product quality, and managing production and supply chain efficiencies.
